HC Deb 19 June 1935 vol 303 cc453-91

8.17 p.m.


I beg to move, in page 17, line 9, at the end, to insert: (c) that effective measures have been taken to ensure the re-employment of, or payment of adequate compensation to, any workpeople who may be displaced; and. The principle involved in the Amendment is one to which my hon. Friends and myself attach no little importance. One of our great preoccupations in modern industry is the development of what we call rationalisation. Whatever our views upon the general principle may be, it is very largely in the hands of those who privately own industry to determine for themselves what arrangements they will arrive at in order to effect economies in the industries that they control. Two elements have already appeared in rationalisation; first, a substantial amount of unemployment invariably accompanies it, and secondly, where a firm is removed by buying out, or some like operation of a voluntary character, there is generally an element in the bargain consisting of some form of compensation to the directors and others on the managerial side of the industry. Outstanding examples of that have been brought to our attention in the course of the last few years.

As I understand the import of the Clause, and especially of Sub-section (2), it is that Sub-section (1) would encourage rationalisation, but before those who are responsible for it are entitled to participate in the Income Tax benefits, they are subject to the qualifications in Subsection (2). Whatever may be the merits of paragraphs (a) and (b) of that Subsection, there ought to be another Subsection on the lines that we suggest. If the object of Sub-section (1) be to encourage rationalisation, I am entitled to argue that rationalisation which takes place in so far as it qualifies for certain financial advantages by way of remission of Income Tax is rationalisation at the public expense. Public money, if you will, to a limited degree, is to be used in order to encourage re-arrangements of industry, which might be in the public interest but will have the effect of displacing workpeople.

Two principles emerge, the first of which is, are we entitled to use public money, even to a limited extent by remission of Income Tax, for private purposes on the mere ipse dixit of a few people controlling an industry, in spite of the fact that the known consequences will be the displacement of a large number of workmen? That is the first big proposition which we are raising. It is not unlike the proposition which already prevails in certain industries. My coal-mining friends know that, in connection with certain wage ascertainments in South Wales and elsewhere, certain expenditure incurred by colliery companies goes into their aggregate expenditure and the companies are entitled to consider that as part of their normal expenditure, even though it is often used in a way that is inimical to the interests of the workers. There is no control over them. We are called upon to approve a system such as this.

Let me put it arithmetically—I am only taking a hypothetical figure. Suppose that company A determines to take over company B and amalgamate it with itself. As a result of the amalgamation, a given sum of money is expended by way of compensation to directors and others attached to the organisation of company B, and I suppose I shall be right in saying that, if it costs £250,000 to take over company B, that £250,000, and any money spent in compensation to directors and so on, would be regarded as part of the ordinary current expenses of company A, because, of course, it is part and parcel of the scheme of rationalisation. I repeat that the scheme of rationalisation may very easily lead, and almost invariably does lead, to the displacement of large numbers of workpeople, and I have very grave doubts, and I believe my hon. Friends have very grave doubts, as to the propriety of allowing expenditure of that sort to be considered for the purposes of Income Tax remission.

If, however, it is to be allowable to make provision for displaced directors or officials, we argue that, just as there may be a case for compensating displaced directors, so there ought to be, as one of the conditions of approving of the amalgamation, a provision on the lines suggested in our Amendment. I do not want to be understood as in any way approving of the principle of using public money, even to a limited extent, for the purpose of helping the rationalisation of private concerns which are absolutely outside public control; but, if that principle be approved, and if compensation for directors and others be allowed by taking it into consideration as an appropriate expenditure in connection with such a scheme of rationalisation, I submit that, before such a scheme is approved, it should be laid down as a cardinal principle that it should satisfy a provision snch as that which I now move.

8.28 p.m.


I support the Amendment which my hon. Friend has moved. Clause 24, for the first time to our knowledge, gives compensation to the employing classes affected by schemes of rationalisation, by making certain concessions from public funds in the form of relaxation of taxation. That recognises the principle that, when there is redundancy and when the Board of Trade are satisfied that it is necessary, compensation should be paid, and I think that equal consideration ought to be given to all those who may be affected. The closing down of works means that a number of workpeople are thrown out of employment, but Clause 24 pays no regard to them. We have had to recognise that, under the present system of private enterprise, nothing has been done hitherto in that direction, but now we find the Government of the day saying, "There has to be redundancy for the benefit of trade, and we are going to help you." Surely it is not beyond the power of the Government and Parliament, having admitted that principle, to say that some recognition shall be given also to the workmen's side. In certain cases employers do this for a favoured few. For instance, when amalgamations have taken place in the coal-mining industry in Lancashire, a number of people have got pensions. But the case of the ordinary workman is not recognised at all. It is merely said that work cannot be found for him, and he must look after himself.

We consider that the employers should be told that they must have some scheme under which these men may get something by way of pension, and that the State should recognise that by remitting taxation, just as it is remitted when payments are made to other redundant classes. If that were done, I should readily accept it, because, although I do not agree with the present system, I want to get as much as I can out of it for my people. I know that it will ultimately collapse, and perhaps in the end it would be better to allow it to do so, but we have to recognise that these men are suffering, and we have to try to mitigate their suffering as much as we can, believing that in time we shall be able to educate them to see that the whole system is wrong. Therefore, I contend that it should be made necessary for the employers to provide something for their workpeople who may be displaced in this way.

8.32 p.m.


If the speeches of the two hon. Members represented all that was to be said on behalf of this proposal, they would find general support in all quarters of the Committee, but they have stressed a point which I am sure will not quite bear investigation. They have suggested that in this Clause the Government are introducing a new principle into our system of taxation but I submit with great deference that that is not the case. Already in this country, following the rules of taxation, there are in operation arrangements whereby those who are responsible for the conduct of industry can claim certain exemptions from taxation. Those exemptions have been founded on experience, and have been found not only to be useful to the managerial side of industry, but to have an influence upon its employing capacity. For example, in ordinary Income Tax practice permission is given to inspectors of taxes to exempt donations to hospitals where it can be proved that the workpeople of the employer making such donations are receiving benefits from the hospital. Surely, the hon. Members would not say that that is wrong. In the case of firms undertaking capital expenditure for machinery which in course of time will fall to be renewed, there again there is in operation a system of granting depreciation. The depreciation is allowed as an exemption from Income Tax. No one would say that that was a bad system. The hon. Members' assumption is that the Government are always giving money to employers and withholding it from the workers, but that is not the case.

The case is visualised in this Clause of industries that have got to such a pitch, by continued losses and other reasons, that they are not able to conduct their business in existing circumstances in the best interests of all concerned, shareholders, management and workpeople. The Clause provides for relief from taxation of contributions made to advance a scheme of amalgamation, but before relief is so given the scheme must, according to the terms of paragraph (b), be certified by the Board of Trade as in the national interests and the industry as a whole. It is really an extension of a principle which has been in operation for years in our Income Tax practice. I would point out to hon. Gentlemen above the Gangway that in these days it is not a question of giving public money to some of these industries; but the fact is that, because of losses incurred over many years, these people are not now contributing anything to the Treasury at all. If this Clause is put into effect, you will, as a result of the action which the Government now propose, have industries which may at some time have been unprofitable so reorganised as once more to become part of the community contributing taxes to the Treasury. Hon. Gentlemen surely do not object to that. If they do, the whole basis of our present system must fall. [HON. MEMBERS: "Hear, hear!"] Hon. Members have made their real meaning clear. It is not so much this proposal to which they object as the whole system under which we live. Their attitude may be very ingenious, but it does not detract from what the Clause purports to do, namely, to enable the Treasury, through the medium of the Income Tax authorities, to grant concessions in the interests of rationalisation when schemes are submitted and proved to be in the national interest.

I should have thought that it would be in the national interest to see that any schemes proposed helped the employing capacity. Why should hon. Members assume that no one but themselves are interested in employment? It is the function of any system to try and employ the people in the best possible way. If it is found that by a scheme of rationalisation more people can be employed profitably, then from their point of view and from the capitalist point of view there is nothing of which to be ashamed in the proposals submitted in this Clause. Hon. Gentlemen above the Gangway are doing a dis-service if they are looking at it from the point of view of a bad employer. It is no use having a large industry carried on at continuous losses because the time must come when the units will fall down completely, and it will be no solace to hon. Gentlemen to go to their constituencies and say: "The capitalist system has broken down; you have no wages at all." This Clause, in my judgment, is not the introduction of a new principle, but the extension of a principle which, in the light of experience, has been found to be beneficial to those engaged in industry, employers and employed alike. I have pleasure in supporting the Government in these proposals, and I suggest that the Amendment would be a negative thing, not because no one has sympathy with it, but because it is generally covered in the terms of the Clause itself.

8.39 p.m.


I am sure that if the hon. Member for Faversham (Mr. Maitland) reads the speech to-morrow morning which he has delivered this evening he will be as much surprised as we are by what he has said. He suggests that the purposes of the Amendment are nothing at all. I understand that the purpose of the Amendment is to secure compensation for displaced workpeople. Is it suggested that such a provision is contained in the Clause? As we understand the Clause, it is to enable a company or business concern which is part of a scheme of general reorganisation of industry or the major portion of an industry to secure that the sum of money that is spent by that concern in connection with that scheme shall be exempt from taxation. That principle is inequitable from the point of view of the displaced work-people and of property owners in general. Is it fair that one class of property owner should have to pay a higher Income Tax in order to make the property of another property owner more valuable? Mark you, this House is not to judge this matter. The scheme is not to come before the House in the form of a Bill, like the London Passenger Transport and Electricity Bills, but is to be dealt with by a certificate of the Board of Trade, and the only safeguards are those contained in the Clause.

It is a most inequitable proposition. If I were a property owner I should protest against it. I should have to try and win my profits in competition in the market. If I failed to conduct my business profitably I should lose my profit, but if I happened to be in another industry and was wise enough to invest money in it, and if a large number of people had invested more in the industry than the market could bear, we could all get together and arrange a scheme. We could come to the Board of Trade and obtain a certificate for it and call upon the general taxpayers of the country to make a contribution towards repairing the value of our own property. That seems to be a monstrous proposition. Something might be said for schemes of reorganisation having the approval of the House of Commons, but schemes of this sort can be carried out without checks and safeguards of any representative assembly. They merely have to satisfy the three considerations contained in this Clause to secure a certificate from the Board of Trade. I do not believe that the system of private enterprise will survive a system of this sort for long. In so far as there has been any tradition of honest dealing and incorruptibility in the Civil Service, it is gravely assailed by principles of this kind. It is not sound, statesmanlike legislation to put such formidable powers into the hands of the President of the Board of Trade unchecked, with no other consideration than the wide generalisations contained in this Clause.

I was astounded to hear the hon. Gentleman the Member for Faversham suggest that the principle contained in the Clause was merely an extention of the existing practice. He used a number of illustrations. He said that at the moment employers are entitled to charge as expenses contributions to hospitals and also that a higher proportion of the amount put to reserve is exempted from taxation than was the case previously.


I did not say anything of the kind. I did not mention reserves.


The hon. Member used the term "depreciation." I remember that two or three years ago there was a proposal in this House to allow an additional 10 per cent. to be placed to reserve and to escape taxation, because it was felt that concerns were not accumulating sufficiently substantial reserves and were being driven unnecessarily on to the open money market.


If the hon. Member wants to know what I said, it was this, that depreciation was charged in respect of machinery which, in the course of time, would fall for renewal. I asked his hon. Friends whether because that charge of depreciation was allowed to be exempted from Income Tax they would regard that as an unsound method, and I gathered that they did not regard it as unsound.


I think the hon. Member and myself are at cross purposes. The statement that I am making is that a few years ago in order to encourage companies to put aside larger sums of money to reserve a larger percentage was allowed to escape taxation. If I am challenged, I am prepared to produce the OFFICIAL REPORT in order to prove my statement. The reason advanced was that companies were distributing in the form of dividends moneys that they should have set aside for reserve and depreciation, which was a very bad thing because they were being driven unnecessarily into the open money market when funds were required to renew their plant. The hon. Member suggested in his speech that the proposal in this Clause was merely an amplification or extension of the same principle. Let me give an illustration. Suppose a colliery company or a steel company put a large sum of money to reserve, higher than the amount allowed, and when the Inland Revenue sought to tax it the company pleaded that they intended to use the money in order to buy new plant. Would the hon. Member suggest that that money should be exempt from taxation? If they proposed to add to their property by purchasing additional capital out of revenue, would it be suggested that they should escape taxation? Of course not. But if they are going to use money to buy out a competitor and add to the value of their property in that way, it is suggested that they should escape taxation. If I were a business man I should not care much whether I used my revenue to purchase additional plant or to buy out a competitor. Both ways would increase the value of my property. I should like to hear from the Financial Secretary to the Treasury how he could justify exemption in the one case and not in the other. In both cases I should be adding to the value of my property.

Towards the end of his speech the hon. Member admitted that the purpose of the Clause was to bring into profitability concerns not now making profits. In other words, the community as a whole are going to subscribe to a tax rebate to put profits into the pockets of people not now making profits. I should like to hear a Conservative defend and justify that principle before any meeting of business men and suggest for a moment that they out of their profits should make contributions in order to restore profitability to some other concern. Let me give a case in point. The steel industry of Great Britain are about to consider a scheme of steel re-organisation. If the scheme had to come before this House we should have a chance of inserting in the necessary Bill the same sort of Clauses that exist in the Electricity Acts and the London Transport Act, where compensation has to be given. The proposal now is to put this Clause in the Finance Bill and try to ride past the House of Commons, so that we shall not be able to secure those Clauses.

I represent a constituency which has one of the oldest steel works in Great Britain. There were employed there between 4,000 to 5,000 people. That steel works has been idle since October, 1929. It was, I believe, the home of the Bessemer process in this country. That area has contributed more wealth per square inch probably than any other area in the British Empire. The workpeople have been idle all the time since the works closed, and there is no prospects as far as I can see of them ever getting into employment there again. There has just been signed a new steel cartel, an arrangement with the steel producers on the Continent to share the markets and a certain quota has been allotted to the British steel producers.

The difficulty in every scheme of that sort is that if you have a productive capacity of, say, 40,000,000 tons per annum, and the amount allowed to you is only 10,000,000 tons per annum, you have to devise some way of sharing that 10,000,000 market among the potential producers of the 40,000,000. That has been the difficulty in regard to steel and coal for many years. How do they propose to do it? There is only one way in which they can do it, and that is by eliminating in the steel industry the redundant steel producers. If you were going to organise a steel producing corporation for Great Britain, which is what ought to be done, you would have to come to this House and get the necessary powers, and we could then insert in the Bill the necessary protection. But a Director-General of steel has been appointed and he is engaged with his colleagues in the industry in producing a scheme of rationalisation.

What may happen? It may not happen, but I have grave fears. The Ebbw Vale Steel Company will obviously be able to exploit the nuisance value of their productive capacity and get a redundancy payment. The rest of the steel producers of Great Britain, having to admit that Ebbw Vale is in the market, must buy her out, and the Ebbw Vale Company's shareholders and the biggest of them is the bank, will be able to secure a portion of the money which they look like losing in the Ebbw Vale steel works at the moment. Redundancy payment will be made by the rest of the producers, Guest, Keen and Baldwin, Dorman Longs and Company, and Brown's. Ebbw Vale will get their cash payment in order to go out of the market permanently, and Guest, Keen and Baldwin's and Dorman Long's will be able to get their exemption from taxation in respect of the money that they have paid to the Ebbw Vale Company, while the person in the whole concern who will get nothing at all will be the Ebbw Vale steel worker who will be left high and dry. That is an unconscionable proposal. There are men and women who have grown up in Ebbw Vale, Dowlais and Blaenavon who, with their fathers before them, have established the foundations of all the fortunes of Great Britain. I said all the fortunes, because steel is the basis of all fortune.


The hon. Member is now getting very wide of the terms of the Amendment.


I was illustrating what the Clause means and what the Amendment means. Our Amendment suggests that if the Ebbw Vale Company is going to have compensation, and if those other companies who buy out the Ebbw Vale Company are going to get compensation, the idle steel workers should come into the picture somewhere. The same thing applies to coal and to cotton, where you have a redundant capacity. In each of these industries schemes are in course of preparation. It was understood that the schemes would have to come before this House for approval. The proposal in the Finance Bill short-circuits the House of Commons. It is on a line with all the other legislation which the present Government have carried. Every imaginable proposal has been devised to try and get things hidden away in Government Departments. It is government by sleight of hand. The Government have not the courage to put these proposals in a Bill which has to come before this House, where they can be criticised, they try to do this in a furtive, clandestine and hole-in-the-corner manner in order that we may not be able to represent the legitimate claims of the workpeople. How any hon. Member can justify the contention that the obsolescent property is entitled to compensation, and the obsolescence of labour is not, defies comprehension.

There is this difference between property and labour, apart from the sentimental and ethical difference which I will not mention because I should be accused of talking sob-stuff, and it is not good parliamentary form to consider the humanities. But you have men in Ebbw Vale who are still skilled steel workers, as there are in the coal industry, men of between 40 and 50 years of age, specialised craftsmen, specialised not only in their technical skill but in the districts in which they live. Unfortunately the basic industries which are to be subject to these schemes are all of them in special parts of Great Britain where alternative employment is not easily obtainable. You have specialised in regions as well as in the human individuals. These schemes mean that you are sentencing these districts and these men to industrial death. They cannot find any way of escape from their situation. The same thing applies also to shipbuilding. I submit to the Committee in all sincerity that if society which, for its own purposes and for efficiency, has specialised these men in their particular place of living now declares that they are no longer required, and does this by a certificate of the President of the Board of Trade, and proposes to compensate everybody else, then, surely, there is every justification for compensating the workpeople. The Government are not doing justice to themselves in attempting to insert in a Finance Bill proposals of a far-reaching character and in handing to the President of the Board of Trade power to give certificates having great financial value attaching to them. We have had quite enough of this sort of legislation, and it will be extremely difficult for the Government to justify themselves not only to us but to many of their own supporters in the country.

9 p.m.


The Amendment has been moved in a reasonable way by the hon. Member for Caerphilly (Mr. Morgan Jones), and supported in a reasonable way by the hon. Member for Leigh (Mr. Tinker). It was answered by the hon. Member for Faversham (Mr. Maitland) with every word of whose speech I entirely agree. The case against the Amendment is overwhelming. The speech of the hon. Member for Ebbw Vale (Mr. Bevan) was an attack on the whole Clause, although he was wise enough to return at the end of every paragraph to the Amendment. We must pursue this discussion upon the basis that the best must be made of capitalism. That was the difficulty in which the hon. Member for Caerphilly found himself, for he found it necessary to assure us that though they might prefer that the whole system should be wiped away yet as long as it was there it was their business to make the best of it. That is the object of the Clause, and, indeed, of all the efforts of the present Government. The hon. Member for Ebbw Vale betrayed his profound socialist convictions by regarding all those who are engaged in industry as the owners of private property for whom the State should do nothing. When the State does anything to assist industry it must necessarily assist the people who are running the industry, and the hon. Member looks upon it as a private present from the Government to the managers of industry.

That is where we differ in our political philosophy. We look upon it as an attempt to help the industry as a whole, the workpeople in the industry, and, thereby the whole of the country. Profound as are his socialist convictions, the hon. Member for Ebbw Vale does not yet seem to hold them with that clearness of view with which he usually expresses himself, because he made the extraordinary statement that by handing to the Board of Trade, a great Government Department, the power to decide whether a particular scheme is in the national interests or not, we were risking the corruption of the whole Civil Service. Really, what becomes of Socialism if no power is to be given to a Government Department! Surely, the whole basis of Socialism is to hand over everything to Government Departments and the heads of Government Departments, who, I suppose, will still be politicians. The hon. Member has such a profound fear of democracy that he cannot trust a Government Department to decide in a small matter such as this whether the thing is in the national interest or not. If he will not trust one Government Department as far as that, I am indeed surprised that he is prepared to hand over the whole administration of the country, our private lives and our private fortunes as well, to a bureaucracy, which is the socialist ideal.

That, I think, was the mistake that the hon. Member for Caerphilly made when he said that the benefit of this proposal would go to the few people controlling the company. That is very far from being the case. These people have to persuade the Board of Trade on a great many points, and above all they have to persuade the Board of Trade that the scheme is in the national interest and in the interest of the industry as a whole. That is the fundamental point. Any scheme that is in the interest of the industry as a whole must be in the interest of the workpeople engaged in that industry. It is all very well to say that it may for the moment throw out of work certain people in certain districts. I suppose that every improvement that has ever been effected in industry has for a short time thrown out of work certain people in certain grades. We remember how, less than 200 years ago, when machinery was first introduced, there were riots and people went about breaking up the machinery. It seemed obvious to them that many people would never be employed again. What has been the result? As a result of that machinery being introduced not only have as many people been employed, but their number has been multiplied by tens and hundreds in those industries, and they have enjoyed wages and conditions undreamt of by their ancestors.

The right hon. Member for Darwen (Sir H. Samuel) said on the last Amendment that everything now depended upon our keeping our industry as efficient and up to date as it could possibly be kept. That can only be done by encouraging every step taken in that direction. We know that the heads of industry are not too eager to enter into schemes of rationalisation, to embrace every suggestion for amalgamation that is put forward. They are not looking about any too eagerly for any such schemes. They need encouragement. We are not spending large sums of public money and giving it to a few people engaged in certain industries in order that they shall make more money themselves. We are merely allowing a certain remission of taxation in cases where it has been proved to the satisfaction of the highest authority which the hon. Member can suggest—




The hon. Member cannot suggest a higher authority than the Board of Trade.


This House.


The highest permanent statutory authority, the Board of Trade. Those who can prove that what they are doing is in the interest of the industry as a whole will be entitled to this remission of taxation. The Amendment asks for compensation for workers who are displaced. On the face of it that is not an unreasonable proposition. As the hon. and learned Member for East Bristol (Sir S. Cripps) said in a previous debate, such a provision has been introduced in certain Acts in the past. But those were definite Acts which were brought before the House. For instance, there was the Electricity Supply Act of 1919. There were the Railway Act and the Local Government Act. A large proportion of the workers on the railway and local government services have since 1920 been excluded from the unemployment insurance scheme under a certificate of exemption granted by the Ministry of Labour. This Clause is in a different category. Here we are not dealing with a definite proposal.


The Financial Secretary would not argue that provisions had been made for the compensation of workers who had been lowered in their grade. That has nothing to do with being turned out of employment. This Clause has no relationship to the unemployment provisions.


In the case of those Acts you knew exactly the people with whom you were dealing. Here you have an amalgamation got together. Those engaged in an industry have faced failure but are making a great effort to pull themselves together. Men are going out of employment perhaps every day. The amalgamation is made and the industry is improved. But a great many people lose employment. How are you going to say whose loss of employment was due to an amalgamation which took place in that way at that time? The difficulties would be very great. Then there is the vagueness of the Amendment. What is "adequate compensation"? The hon. Member for Leigh (Mr. Tinker) recognised that point. The moment the line was drawn as to who would benefit and who would suffer from the new amalgamation we should have the same complaint made, that the benefit went to the favoured few. The older people would demand a pension. What adequate compensation could you give to the young man who, perhaps, had been employed for only two or three months? How much worse off would he be than those engaged in similar work who had been out of employment perhaps for years? Why should he be entitled to special consideration over and above his fellow workers? My view, supposing that the opinion of the Board of Trade was right and that it proved in the interest of the industry as a whole, that that man's prospects of obtaining work later on would be improved; he would very likely obtain better work at a better wage. Those are some of the practical difficulties in the way of the Amendment, and I do not think the Government can be expected to accept it.

9.14 p.m.


I really am extremely surprised at the arguments of the Financial Secretary. I am not surprised at the Government not accepting the Amendment, because they have never yet accepted any Amendment from this side of the House to protect the workers in any scheme they have ever brought forward. This refusal is on a par with their other refusals in the marketing schemes and similar schemes. The Financial Secretary's argument, I understand, starts on this basis: That any scheme that is in the interest of an industry as a whole must be in the interest of the workers. Therefore, he says, why compensate the workers? I say, why compensate the shareholders? Any scheme must be in the interest of the industry as a whole and therefore of the shareholders as a whole. Why, then, compensate them? Why make payments for redundant plant to people who happen to be shareholders in respect of the redundant plant. On this argument, all the shareholders are going to be benefited. But the shareholders are individuals just as the workers are individuals and it does not help one individual to say that, although he is going to lose his money or is going to be put out of his employment, somebody else is going to get twice as much money or somebody else is going to be assured of good employment. The argument that the scheme is good for everybody and that therefore each individual, as an individual, must be satisfied with it, will not meet the case of anybody who as an individual, loses where other people are said to gain.

It is a recognised fact under our system to-day that where individuals suffer for the benefit of a larger class or of the community, whichever it may be, the larger class or the community shall make up to that individual whatever loss he is suffering, although the class of which he is a member may benefit as a whole. That is the general principle which has been acknowledged in this country for centuries as regards compensation for the taking over of property or shares or anything else. When it is for the benefit of the country as a whole that property should be taken and used for some particular purpose, compensation is paid, because one distinguishes between the individual who loses that property and the general community who benefit by its particular use. Every argument that can be applied to the necessity for the payment of compensation in those circumstances applies with equal logic and force to the necessity for the compensation of an individual who is deprived of his employment. There can be no distinction in argument between the one case and the other.

That is why, in all major Acts that have been passed since the War dealing with amalgamations of businesses or services, provisions have been inserted by the House of Commons that compensation shall be paid to all individuals who are displaced or graded down as a result of such amalgamation. The Railways Act of 1921 laid down a code for dealing with all these matters and that code gets rid of all the imaginary difficulties mentioned by the hon. Gentleman. There is a proper arbitration tribunal and a proper scheme for dealing with these questions but, of course, one does not include all those provisions in a short Amendment of this character. But the arrangements are all there in that Act and they have been operated and hundreds of arbitrations have been held and decided under the Fifth Schedule—as I think it is—of the Railways Act, 1921. Ever since that Act, it has been recognised that where the community desires to amalgamate businesses and where that amalgamation necessarily results in the displacement of certain workers and the reclassification of other workers, the community takes the responsibility of seeing that those workers are compensated for their loss, whether of employment or of status.

All we are asking here is that the Board of Trade shall not certify a scheme unless provision is made in that scheme for such compensation or for the re-employment of the workers somewhere else. If a scheme is going to lead to an expansion of employment the workers can be re-employed somewhere else. If not and if certain workers are going to be left high and dry, without employment, then they are entitled to compensation for their individual loss, just as shareholders are entitled to such compensation. I do not think the hon. Gentleman has put forward a single valid argument against that proposition. I am not going into the more general question but I ask the Committee to recognise that this is a case in which we are parting with this matter finally on this Clause. It is not a case in which the House of Commons can subsequently interfere when a scheme is put forward to the Board of Trade because the certificate will be granted before any communication is made to the House. Indeed the House will not know of such a scheme unless the information is given in answer to a question, and then it can only be criticised as a matter of administration upon a Supply day. There is no power to control the Board of Trade.

I ask the Committee to consider this matter seriously because it is of vital importance. If serious schemes are likely to be brought forward on these lines, and one imagines that to be the object of this Clause, it is going to be a very grave matter for the employés concerned, unless this Committee is now going to say that, as a condition of this remission of taxation, we insist that the workers shall be cared for. Just as we have insisted in the past when amalgamations of industries have been brought before the House of Commons, so we should insist now on the Board of Trade seeing to it that provisions for the workers are included in any schemes of this kind.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 39; Noes, 220.

Division No. 241.] AYES. [9.22 p.m.
Adams, D. M. (Poplar, South) Grenfell, David Rees (Glamorgan) Paling, Wilfred
Attlee, Rt. Hon. Clement R. Grundy, Thomas W. Rathbone, Eleanor
Banfield, John William Hall, George H. (Merthyr Tydvil) Salter, Dr. Alfred
Bevan, Aneurin (Ebbw Vale) Jones, Morgan (Caerphilly) Smith, Tom (Normanton)
Cleary, J. J. Kirkwood, David Strauss, G. R. (Lambeth, North)
Cove, William G. Lansbury, Rt. Hon. George Thorne, William James
Cripps, Sir Stafford Leonard, William Tinker, John Joseph
Daggar, George Logan, David Gilbert West, F. R.
Davies, David L. (Pontypridd) Lunn, William Williams, Edward John (Ogmore)
Dobbie, William Macdonald, Gordon (Ince) Williams, Thomas (York, Don Valley)
Edwards, Sir Charles McEntee, Valentine L. Wilmot, John
Gardner, Benjamin Walter Maclean, Neil (Glasgow, Govan)
Graham, D. M. (Lanark, Hamilton) Mainwaring, William Henry TELLERS FOR THE AYES.
Greenwood, Rt. Hon. Arthur Milner, Major James Mr. John and Mr. Groves.
Agnew, Lieut.-Com. P. G. Gluckstein, Louis Halle Molson, A. Hugh Eisdale
Aske, Sir Robert William Graves, Marjorle Moore, Lt.-Col. Thomas C. R. (Ayr)
Assheton, Ralph Griffith, F. Kingsley (Middlesbro', W.) Moreing, Adrian C.
Balley, Eric Alfred George Grigg, Sir Edward Morris, John Patrick (Salford, N.)
Baldwin, Rt. Hon. Stanley Grimston, R. V. Morris-Jones, Dr. J. H. (Denbigh)
Balfour, Capt. Harold (I. of Thanet) Gunston, Captain D. W. Morrison, G. A. (Scottish Univer'ties)
Beaumont, Hn. R. E. B. (Portsm'th, C.) Guy, J. C. Morrison Nation, Brigadier-General J. J. H.
Bennett, Capt. Sir Ernest Nathaniel Hacking, Rt. Hon. Douglas H. Nunn, William
Bernays, Robert Hannon, Patrick Joseph Henry Pearson, William G.
Blindell, James Harbord, Arthur Penny, Sir George
Bossom, A. C. Harvey, George (Lambeth, Kenningt'n) Percy, Lord Eustace
Boulton, W. W. Haslam, Henry (Horncastle) Perkins, Walter R. D.
Bowyer, Capt. Sir George E. W. Haslam, Sir John (Bolton) Petherick, M.
Braithwaite, J. G. (Hillsborough) Headlam, Lieut.-Col. Sir Cuthbert Pickering, Ernest H.
Brass, Captain Sir William Hellgers, Captain F. F. A. Pickthorn, K. W. M.
Broadbent, Colonel John Heneage, Lieut.-Colonel Arthur P. Pownall, Sir Assheton
Brocklebank, C. E. R. Herbert, Capt. S. (Abbey Division) Procter, Major Henry Adam
Brown, Col. D. C. (N'th'l'd., Hexham) Hills, Major Rt. Hon. John Waller Pybus, Sir John
Brown, Brig.-Gen. H. C. (Berks., Newb'y) Holdsworth, Herbert Raikes, Henry V. A. M.
Browne, Captain A. C. Hope, Capt. Hon. A. O. J. (Aston) Ramsay, T. B. W. (Western Isles)
Burghley, Lord Hornby, Frank Ramsbotham, Herwald
Burgin, Dr. Edward Leslie Horsbrugh, Florence Ramsden, Sir Eugene
Burnett, John George Howard, Tom Forrest Reed, Arthur C. (Exeter)
Butt, Sir Alfred Hudson, Capt. A. U. M. (Hackney, N.) Reid, David D. (County Down)
Caporn, Arthur Cecil Hume, Sir George Hopwood Reid, William Allan (Derby)
Carver, Major William H. Hunter-Weston, Lt.-Gen. Sir Aylmer Remer, John R.
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Inskip, Rt. Hon. Sir Thomas W. H. Roberts, Aled (Wrexham)
Chamberlain, Rt. Hon. N. (Edgbaston) Jackson, Sir Henry (Wandsworth, C.) Roberts, Sir Samuel (Ecclesall)
Chapman, Col. R.(Houghton-le-Spring) James, Wing-Com. A. W. H. Robinson, John Roland
Clayton, Sir Christopher Jamieson, Rt. Hon. Douglas Rosbotham, Sir Thomas
Cobb, Sir Cyril Jones, Henry Haydn (Merioneth) Ross, Ronald D.
Cochrane, Commander Hon. A. D. Jones, Lewis (Swansea, West) Ross Taylor, Walter (Woodbridge)
Conant, R. J. E. Kimball, Lawrence Ruggles-Brise, Colonel Sir Edward
Cooper, A. Duff Kirkpatrick, William M. Runge, Norah Cecil
Cooper, T. M. (Edinburgh, W.) Lamb, Sir Joseph Quinton Russell, Albert (Kirkcaldy)
Courthope, Colonel Sir George L. Law Sir Alfred Russell, Alexander West (Tynemouth)
Craddock, Sir Reginald Henry Law, Richard K. (Hull, S. W.) Russell, Hamer Field (Sheffield, B'tside)
Craven-Ellis, William Leech, Dr. J. W. Rutherford, John (Edmonton)
Crookshank, Col. C. de Windt (Bootle) Lees-Jones, John Rutherford, Sir John Hugo (Liverp'l)
Crookshank, Capt. H. C. (Gainsb'ro) Leighton, Major B. E. P. Salmon, Sir Isidore
Cross, R. H. Lennox-Boyd, A. T. Salt, Edward W.
Crossley, A. C. Levy, Thomas Samuel, Rt. Hon. Sir H. (Darwen)
Cruddas, Lieut.-Colonel Bernard Lewis, Oswald Samuel, M. R. A. (W'ds'wth, Putney)
Culverwell, Cyril Tom Lindsay, Noel Ker Selley, Harry R.
Dalkeith, Earl of Little, Graham-, Sir Ernest Shaw, Captain William T. (Forfar)
Davies, Maj. Geo. F. (Somerset. Yeovil) Llewellin, Major John J. Shepperson, Sir Ernest W.
Denman, Hon. R. D. Lockwood, John C. (Hackney, C.) Simmonds, Oliver Edwin
Dower, Captain A. V. G. Loftus, Pierce C. Simon, Rt. Hon. Sir John
Drewe, Cedric Lovat-Fraser, James Alexander Sinclair, Col. T. (Queen's Unv., Belfast)
Eady, George H. Lumley, Captain Lawrence R. Smiles, Lieut.-Col. Sir Walter D.
Eales, John Frederick Mabane, William Smith, Bracewell (Dulwich)
Ellis, Sir R. Geoffrey McCorquodale, M. S. Smith, Sir J. Walker- (Barrow-in-F.)
Elmley, Viscount MacDonald, Rt. Hon. M. (Bassetlaw) Smith, Louis W. (Sheffield, Halls)
Emmott, Charles E. G. C. McLean, Dr. W. H. (Tradeston) Smith, Sir Robert (Ab'd'n & K'dlne, C.)
Emrys-Evans, P. V. Macmillan, Maurice Harold Somerville, Annesley A (Windsor)
Essenhigh, Reginald Clare Macpherson, Rt. Hon. Sir Ian Somerville, D. G. (Willesden, East)
Everard, W. Lindsay Macqulsten, Frederick Alexander Sotheron-Estcourt, Captain T. E.
Flelden, Edward Brocklehurst Maitland, Adam Southby, Commander Archibald R. J.
Foot, Dingle (Dundee) Mallalieu, Edward Lanceiot Spencer, Captain Richard A.
Ford, Sir Patrick J. Manningham-Buller, Lt.-Col. Sir M. Spender-Clay, Rt. Hon. Herbert H.
Fremantle, Sir Francis Margesson, Capt. Rt. Hon. H. D. R. Spens, William Patrick
Fuller, Captain A. G. Martin, Thomas B. Stewart, J. Henderson (Fife, E.)
Ganzoni, Sir John Mason, David M. (Edinburgh, E.) Stones, James
Gault, Lieut.-Col. A. Hamilton Mayhew, Lieut.-Colonel John Storey, Samuel
Gledhill, Gilbert Mellor, Sir J. S. P. Stourton, Hon. John J.
Glossop, C. W. H. Mitchell, Sir W. Lane (Streatham) Strickland, Captain W. F.
Sugden, Sir Wilfrid Hart Ward, Irene Mary Bewick (Wallsend) Windsor-Clive, Lieut.-Colonel George
Thompson, Sir Luke Ward, Sarah Adelaide (Cannock) Wise, Alfred R.
Thomson, Sir James D. W. Waterhouse, Captain Charles Womersley, Sir Walter
Thorp, Linton Theodore Watt, Major George Steven H. Worthington, Sir John
Titchfield, Major the Marquess of Wells, Sidney Richard
Touche, Gordon Cosmo Williams, Charles (Devon, Torquay) TELLERS FOR THE NOES.
Tufnell, Lieut.-Commander R. L. Williams, Herbert G. (Croydon, S.) Lieut.-Colonel Sir A. Lambert Ward
Turton, Robert Hugh Wills, Wilfrid D. and Mr. James Stuart.
Wallace, Sir John (Dunfermline) Wilson, Lt.-Col. Sir Arnold (Hertf'd)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

9.26 p.m.

Commander COCHRANE

I desire to raise an issue rather different from that which has just been discussed on the Amendment. I would ask the Committee to direct their attention to the fact that this Clause is one of a rather unusual type for a Finance Bill in that it seeks to carry out national policy. It is not directly concerned either with the imposition or omission of taxation; that is only incidental to the purpose of carrying out a national policy in the national interest. The Clause, indeed, is described as being to deal with contributions paid for the purpose of rationalising industry. Hon. Members will remember that last night we had a discussion of the meaning of the words "get up" and the Financial Secretary was able to satisfy the Committee that that was a desirable expression to use. I do not wish this evening to invite my hon. Friend to give a dictionary definition of the word "rationalise," but I do seriously invite him to tell the Committee what is the Government view of the meaning of this policy of rationalising, because in paragraph (b) of Subsection (2) of this Clause one of the conditions which has to be fulfilled before this remission of taxation can be made is that the scheme must be in the national interest. I think it is essential before we part with this scheme that the Committee should have a very clear statement from the Government as to what in their view is the national interest in this matter of the rationalisation of industry.

I would like to explain why I make that request. This word "rationalisation" has come to have a sort of specialised meaning. In its ordinary plain meaning, as I understand it, to rationalise industry would merely mean to deal with it in a common sense way; but "rationalise" has come to have a specialised meaning, it has come to mean the centralisation of production. I want to ask my hon. Friend if that is the meaning attached to it in this Clause. If so, I see very grave objections to the proposals of the Government. I would like to remind hon. Members of the position of industry in this country at present. There are in this country about 130,000 factories. If you are going by this means or any other to try and concentrate production and do away with a large number of the small fatcories you will raise a tremendous problem, and I do not think that should be done by a Clause like this in a Finance Bill.

It is sometimes said that the inevitable tendency is for these industrial units to grow larger and larger and that this would be merely to follow up that tendency. That is not the case. In 1930 the number of factories in this country which employed between 500 and 1,000 persons was 949. In 1933 that figure had fallen to 880—a drop of 69. Even more remarkable are the figures for factories employing a thousand persons and upwards. In 1930 the number of these was 421 and in 1933 it had fallen to 335. That means to say that in the three years between 1930 and 1933 the number of factories employing more than 500 persons had fallen from 1,370 to 1,215.

I want briefly to address myself to the question whether this is or is not a desirable tendency and whether it is in the national interest that the Government should encourage an undoubted tendency in industry to-day for the formation of more small units and the suppression of a larger unit, or whether they are in fact proposing to give to this word "rationalisation" what in the past has been its popular meaning, namely, the centralisation of production. I can illustrate my meaning very briefly by reference to the conditions in the distressed areas. I happen to have the honour to represent part of the industrial area of Scotland. There our main preoccupation is to try to introduce fresh industries. That is the only way in which we can see any general and permanent solution of our difficulties. We want the industries spread; we want them divided into smaller portions.

If I am right in that view, that that is really one of the things which is required to ameliorate the conditions in our distressed areas, I do not think there can be any two definitions of what is in the national interest as stated in the Clause. It must be that when the Government give their certificate for the exemption from Income Tax, it will only be given in those cases—I care not what the industry may be—where plant would first of all be suppressed in those very large units and last of all, and only in the last resort, in those small factories which are spread about the country and which are of such enormous value in giving a diversification of industries throughout the country.

There is, in my mind, and in the minds of many people responsible for small industries in this country, a very real fear that this Clause is merely another weapon in the already overstocked armoury of the big trusts in order to enable them to suppress their small competitors. I would ask for a very definite assurance that that is not the case, that the Government, in applying their very wide phrase, "the national interest," will bear in mind the conditions in the distressed areas, and that they will give us a definite assurance that the Clause will not be used for the suppression of the small industrialists, who, after all, are the backbone of the industry of this country.

9.38 p.m.


I would like to say a word in support very largely of the line just taken by the hon. and gallant Member for Dumbartonshire (Commander Cochrane). We are embarking here on a very definite piece of policy called rationalisation, but I should like to know from the Government whether they have any plan for what is real rationalisation and not the kind of irrationalisation which we see very often. The hon. and gallant Member referred to the distressed areas. It is obvious, if you are going to have a rational organisation of industry, that you have to consider the location of industry and the utilisation of the resources of the country and of the social capital that has been sunk in various parts of the country. You do not get that necessarily by a rationalisation scheme, which may be based solely on the question of what is the most profitable way to carry on a particular industry from the point of view of the owners of that industry.

It may and does happen that that produces profit for a certain group of owners but very heavy losses both for the nation and for the locality, when the works are closed down in one locality and concentrated somewhere else, and it may very well be that the works, from the national point of view, would be more economically situated, let us say, in a distressed area than transferred to the outskirts of London or South-East England, where there is a growing concentration of industry. We want to know from the Government, therefore, whether this particular weapon, if one may so call it, introduced in this Bill is to be used in a rational way in accordance with some national plan.

If the Minister can say that this power is being sought because the Government are determined to deal with the whole question of the distressed areas, because they realise that the location of industry is a matter in which the State is concerned, and because they realise that the State has often to bear very heavy losses, whereas the profits of rationalisation go elsewhere, then there is a case for it, but if it is put in merely as a way of giving an advantage to those who are carrying out a particular form of industrial reconstruction, which may in its total repercussions lead to very great hardships in certain districts and actually to a loss to the country and, as the hon. and gallant Member says, counteract what is sought to be done in the distressed areas, then I think the Committee will be wise to refuse to vote for this Clause.

9.42 p.m.


Those hon. Members who represent distressed districts cannot allow this Clause to pass without challenge and without explanation. It is true that the powers that the Board of Trade will have under the Clause are merely powers to give a concession in Income Tax payment and to withhold that concession from those persons who have to pay a penalty for contravening a scheme, because if hon. Members look at the last Sub-section of the Clause, they will see there that those promoting a scheme are to receive a concession, and if anyone is involved in expense in fighting the scheme, he cannot count that as an expense of his business. If anyone in an industry makes a payment to promote the value of his capital by buying out his competitor, he can claim that as an expense of his business, but if the other fellow who is to be bought out, or smashed, or driven to the wall involves himself in expense in defending his property, that is not regarded as an expense of his business. It is an astonishing position in which capital is being landed in Great Britain. It really is time that the Government took the Committee into their confidence and told us exactly what their industrial plans are, because this kind of hole-in-the-corner legislation is not good enough. As the hon. and gallant Member for Dumbartonshire (Commander Cochrane) said, this is not the sort of Bill that should deal with this question at all. The Government should bring in a Bill dealing with industrial planning, so that we should know exactly where we were in the matter. The Committee is hopelessly restricted in discussing this Clause.

The Government use the loose word "rationalisation." I have read a number of text books on industrial planning, in order to try to find out what rationalisation means, and as far as I can gather the fairest and most concise definition of it is to adjust the productive capacity of an industry to the dimensions of the known market and to raise the efficiency of each unit to the optimum point. If you are going to adjust the productive capacity to the dimensions of the known market, you are accepting the existing dimensions of the market as the utmost you can expect to obtain. That seems to me to be merely the codification of scarcity. I know what is the idealisation of it. People say that once the employers in an industry become masters in their own house, once they have got rid of the dead weight of unfertile capital, they will be able to introduce such economies and efficient methods of production as to be able to lower the price of the product and extend employment. It has, however, rarely been known that when employers have obtained full command over an industry they voluntarily reduce the price of the product and introduce more efficient methods. If that be the contention, the last 150 years of capitalist philosophy are falsified, because we always understood that more efficient methods of production would be introduced into an industry by the inefficient man being driven to the wall. Now we understand that efficiency of production and cheapness of goods is to be obtained by creating a series of monopolies in one industry after another. I should have thought that the experience of the United States of America since 1929 is a complete refutation of the hope—


I think the hon. Member had better get to the Clause, and to the question whether there should be a reduction of Income Tax on account of these expenses.


If you will look at the Clause, Captain Bourne, you will see that the President of the Board of Trade is entitled to give a certificate for certain reasons. Are we not entitled to challenge the reasons? I think that I am justified in making the contention that to try to promote prosperity by giving the producer of an article command over its price and to try to bestow profitability upon an industry by organising restriction in its production has, all over the world, been shown to be the wrong way out of a depression. It has been shown in the United States, and it will be shown here. If we are to find our way out of the depression, it must be by augmenting the market and not by contracting the market by these methods. It must be by adding to the purchasing capacity of the consumers by allowing the price of goods to fall.


What about Russia?


The hon. Member knows that there is no Member in the Committee who is more anxious to follow up an interruption than I am, but if I attempted to follow up that interruption I should have the Chairman stop me. I am suggesting to the Committee that it is not in the national interest that schemes of this kind should be sanctioned by the Board of Trade. I would suggest to those hon. Members who believe in the persistence of the capitalist system that this is slow poison. It has been pointed out by Sir Arthur Salter and by many economists that what is wrong with the system at the present time is its complete lop-sidedness. Some industries are given artificial control over the price of their products, and other industries have to sell their products in a competitive market. Some industries have to buy their raw materials which enters into the cost of production in a controlled market, and they have to sell their products in a free market. That is an impossible set of circumstances, and it cannot go on. In one part of the system there is complete rigidity, and in the other part of the system there is anarchic flexibility.

This sort of legislation simply promotes the lop-sidedness and dis-equilibrium which exists in the whole system. One of our greatest difficulties is that our export industries have to sell their products in a world market where there is no control, and their cost of production has been driven up by their having to buy the products of a controlled industry. So long as you pump that slow poison into the industrial system, it will never be able to recover. The Committee is entitled to have considerations of this kind brought before it in a manner that will lend itself to proper and adequate discussion, instead of inserting them in a Finance Bill. My right hon. Friend the Member for Limehouse (Mr. Attlee) has suggested that we ought to be able to ask the Minister what sort of schemes are likely to be sanctioned by the President of the Board of Trade. I am now informed in South Wales that the margins of security afforded by capitalist enterprise are so narrow that you have to shift an industry 20 miles in order to gain an advantage in the market. Here we have an island across which, compared with America or Germany, you could throw a stone. Here is an island which ideally lends itself to economic organisation. We ought to be able to say where an industry should exist. We ought to be able to say in what parts of the country the people could reasonably look forward to permanent employment for an indefinite period. We are not able to say that. (Interruption.) Hon. Members must try to control their frivolity. We are discussing a very serious matter, and we have very few opportunities of discussing such matters. I represent a constituency in which 16 per cent. of the adult population is unemployed, and that is not a very frivolous matter. Here we are parting with powers which may be used by the President of the Board of Trade by departmental edict that would sentence that area to death. That is a very serious matter.


I think the hon. Member is reading rather more into the Clause than it contains. The Clause merely says that in certain circumstances certified by the Board of Trade an industry may deduct certain expenses from Income Tax returns. I think that we had better keep to what the Clause says and not read more into it.


The Government obviously believe that the enticements which they are giving are adequate to bring about a result, because their suggestion in the Clause is that if exemptions from tax are given for a purpose the purpose will be realised. I want to know what these purposes are. I want to know what is the test and what is the criterion. We have industries in South Wales that has been reorganised, for which capital has been provided by extra constitutional means, in order to get 20 miles nearer to the coast. I want to know whether that is the sort of thing that is going to be promoted under this Clause. The Committee are entitled to have a reply. I regret that in this Bill, as in a great many other Bills, principles are being brought before this House in a manner which does not allow of their proper examination and consideration. Over and over again that has been done. No Government of modern times has brought legislation by discussion into greater disrepute than this miserable collection of has-beens that we have got. It is really too bad that when we are doing our utmost to defend the interests of our constituents we should be prevented from doing so by a Government which is trying to legislate in a hole-and-corner fachion. The Committee have not been treated fairly, and I protest against whole communities being sentenced to industrial decay and death by methods which are not having adequate discussion in this House.

9.57 p.m.


I am very glad that the hon. and gallant Member for Dumbartonshire (Commander Cochrane) takes exception to this Clause, because he represents the constituency bordering on my own, and he knows from bitter experience what rationalisation has done for the shipbuilding and engineering industry not only on the Clyde but on the Tyne and all over the country. Like the hon. and gallant Member for Dumbartonshire, I should like to know whether it is to be the policy of the Government to encourage rationalisation along the lines on which it has been working up to now. The shipbuilding and engineering employers have formed a combination to enable them to compensate the shipyards and engineering shops that happen to be redundant, and that is all right for the shareholders, but no compensation whatever has been given to the workers—none. They have been thrown on the streets. This goes back to the time when the Lord President of the Council, who was last week the Prime Minister, went to America in 1929 on a peace excursion. He was Prime Minister at that time, and as a gesture he stopped the building of a destroyer in Dalmuir shipyard in my constituency. I challenged him at that time to say what compensation the workers were to get.


I hardly think that matter can arise on this Clause.


But I am trying to show how rationalisation worked out for the people whom I represent. I was in a position at that time to tell the House that that firm wanted the money and they got compensation, and the Prime Minister said the compensation for the workers was "our incomparable social services." That still is the position. I want to know if the Committee are prepared to pass this Clause, which is going to throw the workers out of employment without any consideration whatever. Formerly the employers had to compensate one another, and now, by this Clause, the Government are going to compensate them over and above that. I want to know why there should be this special consideration for the shareholders, and I want some consideration shown to the workers. In Sub-section (2) of Clause 24 of the Bill it states: (a) that the primary object of this scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom. Here is another serious point to which I would like to draw attention. This is unprecedented. In our housing schemes there is no compensation for the owner of slum property, but here we are going to compensate engineering works that are gigantic slums, with machinery out of date by 20, 30 or 40 years, and not only the machinery but the whole construction of the works. To meet existing conditions it is essential that those works should be recast, re-designed; not only should there be new buildings but new, up-to-date machinery. To secure that we are going to give compensation for redundant works. In that way we shall provide slum property owners with a good case for coming to the Government to claim that they ought to be compensated too. I hope the Committee will not let this Clause go through. I understand that it has been said from this side of the House that there is a scarcity of skilled labour on the Clyde. It is untrue. Although it was said by the Lord Provost of Glasgow it is absolutely untrue. In the engineering industry we on the Clyde are supplying every district in England with skilled labour, and we can give them ever so much more. This talk about a shortage of highly-skilled engineers is all so much nonsense. I should be out of order at the moment in explaining to the House how the Chancellor of the Exchequer, a fortnight ago, had some, grounds for making that statement, but that statement, on the face of it, is untrue, because we can meet all the demands for highly-skilled labour if that highly-skilled labour is treated as highly-skilled labour ought to be treated.

In the Partick Division of Glasgow we have a case now. The whole City of Glasgow and Clydebank are doing their very best to try to retain a marine engineering shop of world-wide reputation. Within the last four years we have had 14 engineering and shipyards shut down as a result of rationalisation. It is perfectly true that there have been 18 similar works and shipyards shut on the Clyde. What has become of these men? We have Henderson's Engineering Shop at Partick. They are at their wits end. The workers held a meeting, presided over by the Lord Provost of Glasgow, and invited to it all the Members of Parliament from the Glasgow area. They are anxious to work, and dread the idea of being thrown on to our incomparable social services. These incomparable social services mean that instead of receiving £3 a week, the men will be practically thrown on the scrapheap. This House evidently does not realise what is behind this Clause, or the power that it is giving to the President of the Board of Trade, who will have to act as if he were an automaton. Here we are dealing with human beings, and there is no better asset to the British Empire than the shipbuilders and engineers who are to be thrown adrift. Think what it means to be reduced from £3 10s. or £3 a week to £1 a week. There are no better men in this House or anywhere else and they are to be asked to allow themselves to be reduecd to £1 a week. That is what rationalisation means. This House has a right to consider all these things. It has no right merely to consider this from the point of view of pounds, shillings and pence. You are destroying the very best asset which you could possibly have. I hope that for the good of Britain and for the future hope of generations yet unborn, the House will reject this Clause.

10.9 p.m.


I apologise for asking the Committee, after that diatribe, to turn its attention once more to Clause 24 of the Finance Bill. I am surprised that the two hon. Members for Dumbarton, who only a short time ago had £4,500,000 given to them and a promise of a further sum, should be raising such an outcry against a remission of taxation which I believe to be a proper trading expense. They admitted that this was a remission of taxation, they went on to call it a subsidy, and they finished up by calling it a payment of compensation. There is no such thing involved in this Clause. If a man insures his premises against fire or his workmen against the Workmen's Compensation Act is it or is it not a trade expenditure? Of course, it is a trade expenditure. If it is necessary to pay a levy to some association in order to preserve the business, surely that is a trade expenditure. The hon. Member for Ebbw Vale (Mr. A. Bevan) said that the inefficient should be driven to the wall. That is all very well in the City of London. You can have the healthy bankruptcy there. When it happens, that business house disappears. But in industry it is not so. The plant remains, and is bought up by some combine. More price-cutting takes place in that industry, and the very fears of the hon. Member for Dumbarton Burghs (Mr. Kirkwood) are realised. You get the smallest firm first going out of business and then the larger amalgamation taking a greater control in industry.

I, myself, have had some experience of one of these reorganisation schemes. I particularly emphasise that word as opposed either to rationalisation or planning. In that particular industry, admittedly a small one, it has had the effect of enabling the small businesses, which would have been forced out, to carry on. It has undoubtedly displaced a certain amount of labour, but all, in so far as they were wage-earners, have found employment since. In fact, there has been a definite shortage of labour in that industry, and the only people out of a job are certain highly-paid officials. I think that the arguments on the other side, although hon. Members keep setting up Aunt Sallies to knock down, have been proved to be completely falsified by facts. I hate Government interference in any form, but I like to help industries to help themselves. I believe that this provision is by far the most important in the whole Budget. It is helping industries to help themselves.

10.12 p.m.


I am not sure whether my hon. and gallant Friend was in the House when the last Amendment was discussed, but if he was, I hope that he will remember that on that occasion, owing to the wide manner in which it was moved and supported, I covered a good deal of ground in support of the Clause as a whole, and I am not going to attempt to repeat my speech. My hon. and gallant Friend asked for a definition of the word "rationalisation." Rationalisation does not appear at all in the text of this Bill, although it does appear in the rubric. That will never be part of the law of the land. I share the distaste of this new word as much as anybody. It is very true that people get hold of a word nowadays and think that it will solve every problem. Nor would I be led to define exactly what the Government meant if they were committed to such a word as this. I am not going to lay down a general trade policy.

Commander COCHRANE

I did not stress the word "rationalisation" but the words in Sub-section (2), "that the scheme is in the national interest." It is to that that I asked the hon. Gentleman to turn his attention.


I was asked what was meant by a scheme being in the national interest. That is certainly a question that should be put to the Board of Trade. I have no doubt that every case will be treated upon its merits. The hon. Member for Ebbw Vale (Mr. A. Bevan) tried to put us into the dilemma, in which those in politics often find themselves and in which some people like to find themselves, which is that you must either stick to the old-fashioned doctrine of laissez faire, letting the weak go to the wall according to the remorseless and pitiless policy of the Manchester school of the last century, or adopt the view that everything must be controlled. That is not the point of view either of His Majesty's Government or of the political party to which I belong. We believe that you need not be driven to either of those logical extremes, and that, as usual, the truth lies somewhere in the middle.

In the modern State with its enormous and unprecedented industrial development the State must assist industry. Nobody is more grateful than the hon. Member for Dumbarton Burghs (Mr. Kirkwood) when the State does so. We say that, while it is not our business to control industry, it is our business to guide industry when our guidance seems necessary; to put on the brake where the brake is necessary, and to put on the spur where the spur can do some good. In this instance, we have thought it wise to assist the tendency in industry to help itself and to get itself into better form to compete with its competitors all over the world as by introducing new machinery which will assist the whole industry, workers as much as the employers. We say in the Bill that when they undertake some scheme to the satisfaction of those best qualified to judge, that is, the authorities of the Board of Trade and the President of the Board of Trade, and when they incur expenditure in order to promote a scheme of that kind, we will allow them to count that expenditure as part of their trade expenses; we will allow them a remission of taxation. Is that an unreasonable act?

I have been asked what is meant by "rationalisation." I am surprised at those words coming from hon. Members opposite, from whom there has been much criticism. I do not quarrel with it. I appreciate also the point of view of those who say: "We want our industries to continue as they are. We do not want our small industries to be forced into the big combines. We deplore that tendency, and we look back upon the past with regret." There is much that must give way to change in the modern world. Hon. Members know that half the troubles—which they deplore as much but not more than we do—of the distressed areas is due to lack of capital and lack of rationalisation. It is not for them to criticise us when we take one step in the direction of the development which they themselves so much desire.

10.19 p.m.


I do not propose to spend much time in challenging the philosophy which has just been expressed from the Government Front Bench. There is substance in the last few words. Members on this side of the House ought perhaps to complain least when the Government make an attempt at planning, as indicated in the Clause. The mining industry has certainly suffered from internecine competition. The weakest have been driven to the wall, but the Government have not helped the industry in the last few years. They have not helped to create an expansion in the export market such as would substantially help the distressed areas, and the distressed areas are suffering primarily through a contraction in the export market. I can appreciate the Government's endeavours to increase the competitive capacity of efficient concerns by compensating, by remission of taxation, concerns that will agree to absorb competitors, and by that means make them redundant; but we are concerned about the enormous number of persons who are made to suffer as a consequence of this policy by being automatically rendered unemployed and redundant. I think it will be admitted by hon. Members from South Wales that there is hardly any prospect of improvement in South Wales until the Government bring before the House in a Bill a policy to deal with the distressed areas.

The location of industry is a vital matter. In my constituency 40 per cent. of the normal complement of persons engaged in the mining industry are now idle, and there is no prospect, as far as I can see, of their being absorbed. Nevertheless it is possible, in accordance with the policy contained in this Bill, for certain employers in the mining industry to present to the Board of Trade a scheme under which still more small mines may be closed, and for the Board of Trade to decide that such a closure should take place in the national interest, when the employers would receive a rebate of taxation as compensation. I suggest to the Financial Secretary that it is essential to define the national interest. It may be considered that the closing of such collieries in South Wales would be in the national interest, but it would certainly be harmful to local interests, and would ultimately lead to further grants to distressed areas to make good the damage that would arise from this policy.

Surely, the term "national interest" ought to be further considered. Something might be done in the interest perhaps of London and Greater London in what might be described as the national interest, that would result in irreparable damage to places like South Wales and the places referred to by the hon. Member for Dumbarton Burghs (Mr. Kirkwood). We on these benches think that the means by which the Government are attempting to solve what ultimately is a social problem are wrong means, because instead of trying to expand the effective market for goods, they are subsidising firms in order to increase the competitive capacity of those firms in an ever-contracting market. We think that that is wrong. They are destroying the effective market for goods. The means test is doing that in distressed areas.


The hon. Gentleman is now getting much beyond this Clause.


I have no desire to get beyond the Clause at all, but surely we are entitled to put up the alternative to the policy contained in this Clause.


I hardly think so. The hon. Gentleman is entitled to argue that the Clause is a bad one, but I do not think that he can go beyond that point.


I suggest that the Government ought to give some additional reasons to those which have been stated by their spokesman from the Front Bench. If it is in the national interest that these schemes have to be considered, it is rather singular that it should be necessary to compensate anybody. If it is essential to compensate shareholders in the national interest, it is equally logical to compensate workmen who are rendered idle as a consequence of this policy. The Government ought to reconsider the whole matter from that angle. Obviously, such schemes as will be propounded will be for the purpose of reducing costs of production, and the major item in the casts of production will be labour costs. They will tend to increase unemployment, and there ought to be provision to compensate those persons who are rendered idle deliberately by encouraging, through the means of this Clause, a policy of this character. We ask for further consideration of the matter; otherwise we shall be obliged to divide against the Clause.

10.27 p.m.


Before we pass from the Clause, I wish to draw the attention of the Committee to the powers given under Sub-section (8) to the President of the Board of Trade and to certain of his officers, and to ask the Financial Secretary or some other Minister of the Government for some explanation of these powers, which in a new venture, such as this Clause is, in a Finance Bill, are extraordinarily wide, and are to be deprecated as regards giving such authority to the bureaucracy. Sub-section (2) says that the Board of Trade shall certify a scheme if it is in the national interest. Sub-section (3) says that the Board of Trade shall cancel suc ha schem eunder certain conditions, and then Sub-section (8) gives power to the President of the Board of Trade—quite rightly, I am sure the Committee will agree—but it goes on to say that that power of certifying a scheme in the national interest shall be delegated also to: A secretary, under-secretary, or assistant secretary of the Board or any person authorised. … by the President of the Board of Trade. So that logically the President of the Board of Trade could, if he so liked, delegate the powers of certifying a sheme to be in the national interest or to cancel a scheme in the national interest, to a lift-man in the Board of Trade or any other person he liked. I know that that is reducing the thing to the extreme, but nevertheless this House is rightly jealous of its powers. We do not like to give powers to other than Ministers directly answerable to the House of Commons. It is to be deprecated very much that such a wide provision should be inserted on the introduction of a new Clause. If the Government reply is that this is a usual provision in Board of Trade legislation, I think that the reply of the Committee will be that this is an unusual measure which has never been introduced before, an dthat past precedents for powers given to the Board of Trade should not necessarily apply to a provision such as this one. It is a matter of very great importance, and I trust that the Financial Secretary to the Treasury, who felt it necessary to intervene before I was able to make this point, will pay that attention to the remarks of his supporters that the rest of the Committee desire should be paid to the remarks of Back-Bench Members.

10.31 p.m.


I do not think that my hon. and gallant Friend need be unduly alarmed at this Clause. It is a common form, which has been used in many Acts of Parliament before. When it refers to the Board of Trade it is necessary to define exactly what is meant by the Board of Trade. The Clause gives the definition as the President of the Board of Trade or any one deputed by him, on his express authority. There is no fear of anyone doing anything for which the Minister is not responsible to Parliament. With regard to any action taken under the Clause the President of the Board of Trade will be responsible to the House of Commons. If the House cannot trust their own Ministers, they have always power to get rid of them. No power has been given to the Board of Trade in this Clause that has not been given many times before.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 222; Noes, 47.

Division No. 242.] AYES. [10.35 p.m.
Agnew, Lieut.-Com. P. G. Cross, R. H. Hope, Capt. Hon. A. O. J. (Aston)
Aske, Sir Robert William Crossley, A. C. Hornby, Frank
Balley, Eric Alfred George Cruddas, Lieut.-Colonel Bernard Horobin, Ian M.
Baldwin, Rt. Hon. Stanley Culverwell, Cyril Tom Horsbrugh, Florence
Balfour, Capt. Harold (I. of Thanet) Dalkeith, Earl of Howard, Tom Forrest
Beaumont, Hon. R. E. B. (Portsm'th, C.) Davies, Edward C. (Montgomery) Hudson, Capt. A. U. M. (Hackney, N.)
Benn, Sir Arthur Shirley Denman, Hon. R. D. Hume, Sir George Hopwood
Bennett, Capt. Sir Ernest Nathaniel Dickie, John P. Hunter-Weston, Lt.-Gen. Sir Aylmer
Bernays, Robert Dower, Captain A. V. G. Inskip, Rt. Hon. Sir Thomas W. H.
Bevan, Stuart James (Holborn) Eastwood, John Francis Jackson, Sir Henry (Wandsworth, C.)
Blindell, James Ellis, Sir R. Geoffrey James, Wing.-Com. A. W. H.
Bossom, A. C. Elliston, Captain George Sampson Jamieson, Rt. Hon. Douglas
Boulton, W. W. Elmley, Viscount Jones, Henry Haydn (Merioneth)
Bowyer, Capt. Sir George E. W. Emmott, Charles E. G. C. Jones, Lewis (Swansea, West)
Boyce, H. Leslie Emrys-Evans, P. V. Kirkpatrick, William M.
Braithwaite, J. G. (Hillsborough) Entwistle, Cyril Fullard Lamb, Sir Joseph Quinton
Broadbent, Colonel John Everard, W. Lindsay Law, Sir Alfred
Brocklebank, C. E. R. Fermoy, Lord Law, Richard K. (Hull, S. W.)
Brown, Col. D. C. (N'th'l'd., Hexham) Fielden, Edward Brocklehurst Leech, Dr. J. W.
Brown, Brig.-Gen. H. C. (Barks., Niwb'y) Foot, Dingle (Dundee) Lees-Jones, John
Browne, Captain A. C. Ford, Sir Patrick J. Leighton, Major B. E. P.
Buchan-Hepburn, P. G. T. Fremantle, Sir Francis Lennox-Boyd, A. T.
Burghley, Lord Fuller, Captain A. G. Levy, Thomas
Burgin, Dr. Edward Leslie Ganzoni, Sir John Lewis, Oswald
Burnett, John George Gault, Lieut.-Col. A. Hamilton Lindsay, Noel Ker
Butt, Sir Alfred Gledhill, Gilbert Llewellin, Major John J.
Caporn, Arthur Cecil Glossop, C. W. H. Lloyd, Geoffrey
Carver, Major William H. Gluckstein, Louis Halle Lockwood, John C. (Hackney, C.)
Castlereagh, Viscount Graves, Marjorie Loder, Captain J. de Vere
Cayzer, Maj. Sir H. R. (Prtsmth., S.) Grigg, Sir Edward Loftus, Pierce C.
Chamberlain, Rt. Hon. N. (Edgbaston) Grimston, R. V. Lovat-Fraser, James Alexander
Chapman, Col. R. (Houghton-le-Spring) Gunston, Captain D. W. Lumley, Captain Lawrence R.
Chapman, Sir Samuel (Edinburgh, S.) Guy, J. C. Morrison McCorquodale, M. S.
Colman, N. C. D. Hacking, Rt. Hon. Douglas H. MacDonald, Rt. Hon. M. (Bassetlaw)
Colville, Lieut.-Colonel J. Hannon, Patrick Joseph Henry McKie, John Hamilton
Conant, R. J. E. Harbord, Arthur Macmillan, Maurice Harold
Cooper, A. Duff Harvey, George (Lambeth, Kenningt'n) Manningham-Buller, Lt.-Col. Sir M.
Cooper, T. M. (Edinburgh, W.) Haslam, Henry (Horncastle) Margesson, Capt. Rt. Hon. H. D. R.
Courthope, Colonel Sir George L. Haslam, Sir John (Bolton) Martin, Thomas B.
Craddock, Sir Reginald Henry Headlam, Lieut.-Col. Sir Cuthbert Mason, Col. Glyn K. (Croydon, N.)
Craven-Ellis, William Hellgers, Captain F. F. A. Mayhew, Lieut.-Colonel John
Critchley, Brig.-General A. C. Heneage, Lieut.-Colonel Arthur P. Mellor, Sir J. S. P.
Crookshank, Col. C. de Windt (Bootle) Herbert, Capt. S. (Abbey Division) Mills, Major J. D. (New Forest)
Crookshank, Capt. H. C. (Gainsb'ro) Hills, Major Rt. Hon. John Waller Mitchell, Harold P. (Br'tf'd & Chisw'k
Mitchell, Sir W. Lane (Streatham) Ross, Ronald D. Storey, Samuel
Molson, A. Hugh Elsdale Ross Taylor, Walter (Woodbridge) Stourton, Hon. John J.
Monsell, Rt. Hon. Sir B. Eyres Ruggles-Brise, Colonel Sir Edward Strickland, Captain W. F.
Moore, Lt.-Col. Thomas C. R. (Ayr) Runge, Norah Cecil Stuart, Hon. J. (Moray and Nairn)
Morgan, Robert H. Russell, Albert (Kirkcaldy) Sugden, Sir Wilfrid Hart
Morris-Jones, Dr. J. H. (Denbigh) Russell, Alexander West (Tynemouth) Thomas, James P. L. (Hereford)
Morrison, G. A. (Scottish Univer'ties) Russell, R. J. (Eddisbury) Thompson, Sir Luke
Muirhead, Lieut.-Colonel A. J. Rutherford, John (Edmonton) Thomson, Sir James D. W.
Nall, Sir Joseph Rutherford, Sir John Hugo (Liverp'l) Thorp, Linton Theodore
Nation, Brigadier-General J. J. H. Salmon, Sir Isidore Titchfield, Major the Marouess of
Nunn, William Salt, Edward W. Todd, A. L. S. (Kingswinford)
Patrick, Colin M. Samuel, M. R. A. (W'ds'wth, Putney) Touche, Gordon Cosmo
Peake, Osbert Sandys, Duncan Tufnell, Lieut.-Commander R. L.
Pearson, William G. Selley, Harry R. Turton, Robert Hugh
Penny, Sir George Shaw, Captain William T. (Forfar) Wallace, Sir John (Dunfermline)
Percy, Lord Eustace Shepperson, Sir Ernest W. Ward, Lt.-Col. Sir A. L. (Hull)
Perkins, Walter R. D. Simmonds, Oliver Edwin Ward, Irene Mary Bewick (Wallsend)
Petherick, M. Simon, Rt. Hon. Sir John Ward, Sarah Adalaide (Cannock)
Pownall, Sir Assheton Sinclair, Col. T. (Queen's Unv., Belfast) Waterhouse, Captain Charles
Procter, Major Henry Adam Smiles, Lieut.-Col. Sir Walter D. Watt, Major George Steven H.
Pybus, Sir John Smith, Bracewell (Dulwich) Wells, Sydney Richard
Raikes, Henry V. A. M. Smith, Sir J. Walker- (Barrow-in-F.) Williams, Herbert G. (Croydon, S.)
Ramsay, T. B. W. (Western Isles) Smith, Louis W. (Sheffield, Hallam) Wills, Wilfrid D.
Ramsbotham, Herwald Smith, Sir Robert (Ab'd'n & K'dlne, C.) Windsor-Clive, Lieut.-Colonel George
Ramsden, Sir Eugene Somerville, Annesley A. (Windsor) Wise, Alfred R.
Reed, Arthur C. (Exeter) Sotheron-Estcourt, Captain T. E. Wood, Sir Murdoch McKenzie (Banff)
Reid, William Allan (Derby) Southby, Commander Archibald R. J. Worthington, Sir John
Remer, John R. Spencer, Captain Richard A.
Roberts, Sir Samuel (Ecclesall) Spender-Clay, Rt. Hon. Herbert H. TELLERS FOR THE AYES.
Robinson, John Roland Stanley, Rt. Hon. Lord (Fylde) Sir Walter Womersley and Major
Ropner, Colonel L. Stewart, J. Henderson (Fife, E.) George Davies.
Rosbotham, Sir Thomas Stones, James
Adams, D. M. (Poplar, South) Hall, George H. (Merthyr Tydvil) Milner, Major James
Attlee, Rt. Hon. Clement R. Hamilton, Sir R. W. (Orkney & Zetl'nd) Owen, Major Goronwy
Banfield, John William Harris, Sir Percy Paling, Wilfred
Bevan, Aneurin (Ebbw Vale) Holdsworth, Herbert Rothschild, James A. de
Buchanan, George Janner, Barnett Salter, Dr. Alfred
Cleary, J. J. Jones, Morgan (Caerphilly) Smith, Tom (Normanton)
Cripps, Sir Stafford Kirkwood, David Strauss, G. R. (Lambeth, North)
Daggar, George Lansbury, Rt. Hon. George Tinker, John Joseph
Davies, David L. (Pontypridd) Leonard, William West, F. R.
Dobbie, William Logan, David Gilbert White, Henry Graham
Edwards, Sir Charles Lunn, William Williams, Edward John (Ogmore)
Gardner, Benjamin Walter Mabane, William Williams, Thomas (York, Don Valley)
Grenfell, David Rees (Glamorgan) Macdonald, Gordon (Ince) Wilmot, John
Griffith, F. Kingsley (Middlesbro', W.) McEntee, Valentine L.
Griffiths, George A. (Yorks, W. Riding) Maclean, Neil (Glasgow, Govan) TELLERS FOR THE NOES.
Groves, Thomas E. Mainwaring, William Henry Mr. John and Mr. D. Graham.
Grundy, Thomas W. Mallalieu, Edward Lancelot

Clause 25 ordered to stand part of the Bill.